Pierce et al v. Atlantic Speciality Insurance Company et al

Filing 300

MEMORANDUM OPINION AND ORDER by Senior District Judge James A. Parker denying Defendants Atlantic Specialty and Continental's 284 MOTION for Reconsideration of Fee Award Pursuant to 28 U.S.C. §1447(C), 293 MOTION for Reconsideration of Fee Award. (bap)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO

MARK PIERCE, WILLIAM C. ENLOE, and
JILL COOK, TRINITY CAPITAL
CORPORATION and LOS ALAMOS
NATIONAL BANK,
Plaintiffs,
vs.

Civ. No. 16-829 JAP/KBM

ATLANTIC SPECIALTY INSURANCE
COMPANY, FEDERAL INSURANCE
COMPANY, and CONTINENTAL
CASUALTY COMPANY,
Defendants.

MEMORANDUM OPINION AND ORDER
On July 26, 2017, this Court entered a MEMORANDUM OPINION AND ORDER (Doc.
No. 279) (July 26, 2017 Order), concluding that this proceeding should be remanded to the First
Judicial District Court in Los Alamos County after the Court rules on the Plaintiffs’ requests for
attorney’s fees and costs against both Defendants Atlantic Specialty Insurance Company (ASIC)
and Continental Casualty Company (Continental). On August 10, 2017, Continental filed
DEFENDANT CONTINENTAL CASUALTY COMPANY’S MOTION FOR
RECONSIDERATION OF FEE AWARD PURSUANT TO 28 U.S.C. §1447(C) (Doc. No. 284)
(Continental’s Motion for Reconsideration). Continental states that it does not seek
reconsideration of the Court’s remand decision, but rather, asks the Court to reconsider its
finding that Continental is liable for the Plaintiffs’ attorney’s fees and costs. Continental’s
Motion for Reconsideration at 1.
1

On August 15, 2017, Plaintiffs Trinity Capital Corporation and Los Alamos National
Bank, N.A. (collectively, LANB) filed a RESPONSE OF [LANB] TO [CONTINENTAL’S]
MOTION FOR RECONSIDERATION OF FEE AWARD PURSUANT TO 28 U.S.C. §1447(C)
[Doc. 284] (Doc. No. 285) (LANB’s Response). Plaintiffs Mark Pierce, William C. Enloe, and
Jill Cook each joined in LANB’s Response (Doc. Nos. 286, 287, and 289). LANB’s Response
argues, in part, that Continental’s Motion for Reconsideration should be denied because it
contains nothing more than a “rehash of arguments” that the Court already considered and
rejected. LANB’s Response at 7. In addition, LANB states that Continental’s Motion for
Reconsideration is premature because the Court has not yet ruled on the amount of attorney’s
fees and costs to be awarded or how those amounts should be apportioned between ASIC and
Continental. Id.
On August 23, 2017, Continental filed DEFENDANT [CONTINENTAL’S] REPLY IN
SUPPORT OF ITS MOTION FOR RECONSIDERATION OF FEE AWARD PURSUANT TO
28 U.S.C. §1447(C) (Doc. No. 291) (Continental’s Reply). Continental primarily contends that
neither the Court nor LANB’s Response addressed Continental’s argument that it could not have
reasonably ascertained a basis for realignment of the parties, along with a basis to assert that
more than $75,000 was in controversy as to Continental, until Continental received various state
court pleadings, which it did not receive until about July 21, 2016. See Continental’s Reply at 1–
2. Thus, according to Continental, its August 19, 2016 Notice of Removal (Doc. No. 232) was
filed within 30 days of July 21, 2016, and, therefore, Continental had an objectively reasonable
basis to believe it had timely removed the case.
Also on August 23, 2017, ASIC filed DEFENDANT ATLANTIC SPECIALTY
INSURANCE COMPANY’S MOTION FOR RECONSIDERATION OF FEE AWARD (Doc.

2

No. 293) (ASIC’s Motion for Reconsideration). On August 31, 2017, LANB filed RESPONSE
OF TRINITY CAPITAL CORPORATION AND [LANB] TO [ASIC’S] MOTION FOR
RECONSIDERATION OF FEE AWARD [Doc. 293] (LANB’s Response) (Doc. No. 298).
There is no need for a reply.
Motion to Reconsider
I.

LEGAL STANDARD
The Federal Rules of Civil Procedure do not expressly authorize a motion for

reconsideration. However, as a general rule, a court will grant a motion for reconsideration when
there is: “(1) an intervening change in the controlling law, (2) new evidence previously
unavailable, and (3) the need to correct clear error or prevent manifest injustice.” Servants of the
Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). A motion for reconsideration “is
appropriate where the court has misapprehended the facts, a party’s position, or the controlling
law.” Id. A motion for reconsideration is not an opportunity to advance arguments that the Court
has already addressed and rejected, nor is a motion to reconsider an avenue to raise arguments
that a party failed to present earlier. United States v. Christy, 739 F.3d 534, 539 (10th Cir.), cert.
denied, 135 S.Ct. 104 (2014); Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir. 1991),
cert. denied, 506 U.S. 828 (1992). A decision on a motion to reconsider generally is committed
to the Court’s sound discretion. Hayes Family Tr. v. State Farm Fire & Cas. Co., 845 F.3d 997,
1004-05 (10th Cir. 2017).

3

II.

DISCUSSION
A. Continental’s Motion to Reconsider
1. Background
On May 31, 2016, Mr. Enloe filed a First Amended Complaint against various

Defendants and, for the first time, named Continental as one of the Defendants. On June 6, 2016,
Continental was served with Mr. Enloe’s May 31, 2016 First Amended Complaint. See Doc. No.
156. On August 19, 2016, Continental attempted to remove this case on the basis of diversity
jurisdiction, more than thirty days after service of Mr. Enloe’s amended pleading. DEFENDANT
[CONTINENTAL’S] NOTICE OF ADDITIONAL GROUNDS FOR REMOVAL (Doc. No.
232) (Continental’s Notice of Removal). Continental stated that while none of the PlaintiffInsureds had set out the amount in controversy in the pleadings, Continental had a reasonable
belief that the amount in controversy exceeded the sum of $75,000. Continental’s Notice of
Removal at 4. Continental also noted that its insurance policy was an excess policy that attached
above a five million dollar policy issued by ASIC and a five million dollar policy issued by St.
Paul. Id. at 5.
Continental represented that while ASIC had removed the underlying consolidated state
court proceeding on July 18, 2016, on the basis of a federal question, ASIC did not file pleadings
from the consolidated state court proceeding into the federal court docket until July 21, 2016.
According to Continental, only upon reviewing the pleadings filed July 21, 2016 was it able to
ascertain that the matter in controversy likely exceeded $75,000. Id. at 6. Thus, Continental
argues that its August 19, 2016 Notice of Removal was filed within 30 days of July 21, 2016,
and was timely. See July 26, 2017 Order (discussion of procedural background in more detail).

4

In its July 26, 2017 Order, the Court held that Continental’s notice of removal was
untimely. In reaching this conclusion, the Court examined when Continental was first able to
intelligently ascertain that the underlying consolidated state court proceeding was removable on
the basis of diversity jurisdiction. July 26, 2017 Order at 29.
The Court acknowledged but rejected Continental’s position that it could not have
determined the amount in controversy from Mr. Enloe’s May 31, 2016 First Amended Complaint
since Mr. Enloe did not set forth a specific amount in controversy. Id. at 29–31. The Court
reasoned, in part, that the May 31, 2016 First Amended Complaint should have alerted
Continental that the jurisdictional amount for diversity jurisdiction could have been met based on
the allegation that Mr. Enloe was forced to retain his own legal counsel “and spend hundreds of
thousands of dollars to defend himself” in the pertinent proceedings. See id. at 32. The Court also
noted Mr. Enloe’s claims for awards of compensatory and punitive damages, treble damages
under the Unfair Practices Act, and statutory attorney’s fees, as well as other allegations that
sufficiently informed a defendant that the jurisdictional minimum for diversity jurisdiction could
have been satisfied. Id.
In addition, the Court considered Continental’s assertion that because its insurance policy
was a “second-layer excess insurance policy that attaches after exhaustion of a five million dollar
primary policy issued by ASIC and a five million dollar first-layer excess policy issued by
[Travelers/]St. Paul[,]” Continental could not have known the jurisdictional amount was met
until Continental knew that the Insureds sought more than ten million dollars, thereby triggering
coverage under its excess policy. Id. at 31–33. The Court reviewed the cases cited by Continental
and found them distinguishable as well as non-binding on this Court. Id. at 33–34. Moreover, the
Court observed that Continental did not identify any case law from the Tenth Circuit Court of

5

Appeals or any Circuit Court of Appeals to support its position.1 In sum, the Court determined
that Continental’s argument regarding a ten-million dollar plus jurisdictional amount was
frivolous. Id. at 34.
2. Analysis
In its Motion for Reconsideration, Continental revisits some of the same arguments that
the Court already considered and rejected. Continental asserts, for example, that a plaintiff must
satisfy the $75,000 jurisdictional minimum for diversity jurisdiction as to each defendant.
Continental Motion for Reconsideration at 3. Continental cites a number of decisions from other
Circuit Courts in support of its position that severally liable defendants must each satisfy the
jurisdictional mount. Continental’s Motion at 3–4. While the cited cases stand for the proposition
that each severally liable defendant must independently establish the $75,000 jurisdictional
minimum, it does not necessarily follow, as argued by Continental, that an excess insurer like
itself must demonstrate that the matter in controversy exceeds the figure of $10,075,0002 to
satisfy the jurisdictional minimum under 28 U.S.C. § 1332(a). Compare, e.g., Middle Tennessee
News Co. v. Charnel of Cincinnati, Inc., 250 F.3d 1077, 1081 (7th Cir. 2001) (discussing that a
plaintiff may aggregate the amount against the defendants to satisfy the amount in controversy
requirement only if the defendants are jointly liable but that a plaintiff must satisfy the amount in
controversy requirement against each individual defendant if the defendants are severally liable);

1

In its Motion for Reconsideration at 6, Continental cites Paros Properties LLC v. Colo. Cas. Ins. Co., 835 F.3d
1264 (10th Cir. 2016) for the proposition that a pleading must give a defendant “clear and unequivocal notice” of the
amount in controversy. The Court agrees with this well established principal of law. See July 26, 2017 Order at 21
(discussing that the pertinent pleading itself must give “clear and unequivocal notice” that a case is removable in
accordance with 28 U.S.C. 1446(b)).
2
Presumably, it is Continental’s position that it could not have known that this matter in controversy exceeded the
sum of $75,000 until it first determined that the Plaintiff-Insureds sought more than $10 million dollars. Thus, in
order to remove the case based on diversity jurisdiction, Continental would have to establish that the matter in
controversy exceeded $10 million dollars plus $75,000. Yet, Continental did not make this pitch in its Notice of
Removal, in which it merely stated that once the parties were appropriately realigned, “the matter in controversy
likely exceeds $75,000.” Notice of Removal at 6.

6

E.R. Squibb & Sons, Inc. v. Accident & Cas. Ins. Co., 160 F.3d 925, 933 (2d Cir. 1998) (“each
and every severally liable defendant must, in the normal course of things, meet the amount in
controversy”).
None of the decisions cited by Continental address circumstances that place an excess
insurance carrier in a different category of defendants which, in order to remove a case, must
show not only that the amount in controversy exceeds $75,000 but that the sum also exceeds $10
million dollars so as to trigger the excess insurance policy. Indeed, to require this type of
showing to satisfy the jurisdictional minimum might entail resolution of the underlying claims
and a determination of which insurance company is liable.
Based on its novel argument, Continental claims that “the Court did not reach the issue
whether Enloe’s amended petition effectively alleged $10,075,000 in controversy.” Continental’s
Motion at 5. However, this is not accurate. In its decision, the Court “acknowledge[d]
Continental’s argument that the jurisdictional minimum was not met until Continental knew
there were claims exceeding ten million dollars.” July 26, 2017 Order at 33. Even if the Court
did not expressly find that the jurisdictional minimum of $75,000 was met as to each of the two
removing Defendants, the allegations by Mr. Enloe that he was forced to “spend hundreds of
thousands of dollars to defend himself,” along with other allegations in Mr. Enloe’s May 31,
2016 First Amended Complaint, were sufficient to show that more than $75,000 was in
controversy as to ASIC and as to Continental. See id. at 32. The Court remains unpersuaded that
an excess insurance carrier may only remove a case upon realizing that the policy limits of its
excess insurance policy are triggered in addition to the $75,000 jurisdictional minimum. That is
not the law, and the Court continues to find this argument frivolous.

7

In its Reply, Continental emphasizes that neither the Court nor the Insureds responded to
Continental’s argument that it could not have known from Mr. Enloe’s May 31, 2016 First
Amended Complaint that a sum exceeding $75,000 was at issue with respect to Continental.
Continental’s Reply at 1–2. Continental claims that it “would be inequitable and improper to
award fees against Continental on the basis that its arguments [regarding a timely removal] were
objectively unreasonable when, to this day, those arguments stand unrebutted in the record.” Id.
at 2. In the Reply, Continental seems to assert either that a plaintiff must allege the jurisdictional
amount of $75,000 as to each defendant or that a plaintiff must allege a controversy implicating
an amount of $10,075,000, or both. Id. 2-5. As explained above, the Court will not find that an
excess insurance carrier such as Continental can only remove a case upon knowing that its
excess insurance policy will be triggered, i.e., after the primarily liability policies with a
combined limit of $10 million appear to be implicated.
The Court again considers Continental’s position that it was unable to intelligently
ascertain that a sum exceeding $75,000 was in controversy “as to Continental,” see Continental’s
Reply at 2, until Continental reviewed additional state court pleadings that were first docketed in
this federal proceeding on July 21, 2006. See July 26, 2017 Opinion at 31–32. Continental argues
that the caption of Mr. Enloe’s May 31, 2016 First Amended Complaint “noted the existence of
other claims between the Insureds but the petition did not set forth the substance or status of
those claims.” Continental’s Reply at 2; see also Continental’s Motion at 2, 7 (maintaining that
the Court failed to address Continental’s position that it did not recognize a basis to realign the
parties in support of diversity jurisdiction until Continental received “the full state court record
of claims, cross-claims, and dismissals of cross-claims” and asserting that the “relevance of the

8

state court record as to realignment presents an additional basis supporting Continental’s
objectively reasonable grounds to remove on August 19, 2016”).
The Court did consider this argument in its earlier decision – “Continental represents that
only after reviewing pleadings of Mr. Pierce, Ms. Cook, and LANB in the consolidated state
court proceeding and the pleadings in the SEC Proceeding, could it state in good faith that the
total defense costs at issue would satisfy the $75,000 jurisdictional minimum." July 26, 2017
Order at 31. The Court rejected this argument, observing that Continental did not identify any
specific pleadings that finally alerted it that the jurisdictional amount might be satisfied. Id. at
31–32. The Court also acknowledged Continental’s claim that it first ascertained that the case
might be removed after Continental learned of “the number of law firms that likely were
involved in the regulatory proceedings and the length of time those proceedings were underway.”
Id. at 32. But, it was clear from Mr. Enloe’s May 31, 2016 First Amended Complaint, the caption
of which contained at least eight different parties, that a number of law firms were very likely
involved. Moreover, the caption of the consolidated state court proceeding plainly indicated from
the case numbers assigned, e.g., D-132-CV-2015-00082, that the state court cases stemmed from
actions filed in early 2015. Enloe May 31, 2016 First Amended Complaint (Doc. No. 232–1).
Furthermore, the allegations in Mr. Enloe’s May 31, 2016 First Amended Complaint referred to
events that occurred from 2010 to 2012. May 31, 2016 First Amended Complaint at 1
(Preliminary Statement). In its Notice of Removal, Continental recited, in part, these same or
similar allegations from Mr. Enloe’s amended pleading regarding pertinent events in 2012. Doc.
No. 232 at 5. Continental’s apparent argument that it did not know how long the state court
proceeding had been underway until it reviewed other pleadings on July 21, 2017 is not
believable.

9

While Continental might have gleaned a clearer picture of the claims among the various
parties after reviewing additional pleadings on July 21, 2017, Mr. Enloe’s May 31, 2017 First
Amended Complaint provided clear and unequivocal notice that the amount of controversy as to
Continental might exceed the $75,000 jurisdictional minimum. As already noted, Mr. Enloe
alleged that he had spent hundreds of thousands of dollars to defend himself and that he sought
insurance coverage in relation to those attorney’s fees. Doc. No. 232–1 at 2. Mr. Enloe asserted
multiple causes of action against ASIC as to its insurance policy coverage, including claims for
punitive damages and treble damages under the New Mexico Unfair Practices Act. Doc. No.
232–1, ¶¶ 120, 142, 146, 162. Mr. Enloe noted that ASIC’s policy limit was 5 million dollars. Id.
¶ 54. But, Mr. Enloe did not bring his claims solely against ASIC. Presumably, Mr. Enloe had a
good faith basis for naming all of the insurance carriers, including an excess insurance carrier
like Continental, which by itself was a strong signal as to the amount in controversy. The
allegations from Mr. Enloe’s May 31, 2016 First Amended Complaint are sufficiently specific to
apprise Continental that the jurisdictional minimum could be met and that any notice of removal
had to have been filed within 30 days of service of Mr. Enloe’s amended pleading.
In reaching this decision, the Court recognizes that the Tenth Circuit Court is “very strict
in assessing whether the grounds for removal are ascertainable” and that there must be “a
specific allegation that damages exceed the federal jurisdictional amount of $75,000.” Paros
Properties, 835 F. 3d at 1269. “The 30-day clock does not begin to run until the plaintiff
provides the defendant with ‘clear and unequivocal notice’ that the suit is removable.” Id.
(citation omitted). In Paros, the Tenth Circuit Court discussed a number of court decisions where
the complaint or “other paper” did not provide unequivocal notice of a right to remove and/or
where the pertinent allegations consisted of generalities. See id. The Paros Court noted the use of

10

ambiguous language in those pleadings which left the defendant to “only guess as to whether the
claim exceeded $75,000.” Id. at 1269–70.
These are not the circumstances here. Mr. Enloe’s May 31, 2016 First Amended
Complaint does not leave the defendant to guess at the jurisdictional minimum. He clearly
alleges that he sought insurance coverage for the hundreds of thousands of dollars he expended
to defend himself in the regulatory proceedings. These allegations do not require a defendant to
make an inference “from an investigation or a review of its files.” Id. at 1270 (citation omitted).
Moreover, the Court has not held that Continental had a duty to investigate “outside the face of
[Mr. Enloe’s May 31, 2016 First Amended Complaint].” See Continental’s Reply at 4. See also
July 26, 2017 Order at 32 (noting that a removing defendant has no duty to investigate the
potential grounds for removal).
In sum, the Court is not persuaded that Continental had objectively reasonable grounds to
believe that its August 19, 2016 removal of the underlying consolidated state court proceeding
was timely. Moreover, Continental’s Motion for Reconsideration does not set out “an intervening
change in the controlling law,” new evidence that was previously unavailable, or “the need to
correct clear error or prevent manifest injustice” sufficient to justify reconsideration. See
Servants of the Paraclete, 204 F.3d at 1012. Instead, Continental advances arguments that the
Court already addressed and rejected. Stated differently, Continental failed to show that the
Court misapprehended the facts, the positions of the parties, or the controlling law. Therefore,
the Court will deny Continental’s Motion for Reconsideration.

11

B. ASIC’s Motion to Reconsider
ASIC requests that the Court not impose on it an award of attorney’s fees based on
ASIC’s assertion that it removed this proceeding to federal court “in good faith and with good
cause.” ASIC’s Motion for Reconsideration at 2. According to ASIC, it did not know there was a
federal question to support removal until it reviewed Mark Pierce’s July 7, 2016 Amended
Complaint. Id. Thus, ASIC represents that its July 18, 2016 Notice of Removal based on federal
question jurisdiction was timely and that its objectively reasonable basis for removal on July 18,
2016 defeats a request for attorney’s fees under 27 U.S.C. § 1447(c). Id. at 3.
Similar to Continental’s Motion for Reconsideration, ASIC offers no discussion of the
pertinent law regarding a motion for reconsideration, nor does it present evidence that there has
been: “(1) an intervening change in the controlling law, (2) new evidence previously unavailable,
[or] (3) the need to correct clear error or prevent manifest injustice.” See Servants of the
Paraclete, 204 F.3d at 1012. Furthermore, like Continental, ASIC advances the same arguments
it raised in its opposition to the Motions to Remand that the Court carefully discussed and
rejected. For example, ASIC maintains that “specifically Pierce’s indemnity claims against ASIC
for Pierce’s incurring attorney fees and costs in association with responding to investigative
requests of various federal governmental agencies for matters arising out of activity regulated by
federal law, appeared for the first time that federal question jurisdiction applied.” ASIC’s Motion
for Reconsideration at 2. However, in ASIC’s Response to Mr. Pierce’s Motion to Remand,
ASIC also claimed that Mr. Pierce alleged for the first time in his July 7, 2016 Amended
Complaint that “the insurance coverage he seeks under ASIC’s policy arises from alleged
investigations, proceedings and enforcement actions, brought against him under federal law.”

12

ASIC Response at 5 (Doc. No. 223). In support, ASIC recited specific allegations from Mr.
Pierce’s July 7, 2016 Amended Complaint. Id. at 6 and 7–8, 9–10.
In its July 26, 2017 Order, the Court thoroughly reviewed ASIC’s position, comparing
each allegation relied on by ASIC to show its removal was timely with the many similar
allegations found in the parties’ earlier Complaints and Cross Claims against ASIC. The Court
concluded, “without a doubt, that the allegations upon which ASIC relies for federal question
jurisdiction, as set out in Mr. Pierce’s July 7, 2016 Amended Complaint, are found either
verbatim, or in spirit, or both in the earlier Complaints filed and served on ASIC by Mr. Pierce,
Mr. Enloe, and LANB, and in the Cross Claim filed against ASIC by Ms. Cook.” July 26, 2017
Order at 24. Thus, the Court found that ASIC should have first ascertained, many months earlier
than its July 18, 2016 Notice of Removal, the possibility that a federal question existed sufficient
for removal. Id. at 22–28.
ASIC’s Motion for Reconsideration is perfunctory and provides no argument that the
Court has misapprehended the facts, a party’s position, or the controlling law. While true that the
Court has the discretion to award attorney’s fees under 28 U.S.C. § 1447(c), the Court concludes
that fees are appropriate under the present circumstances where the Court finds ASIC lacked an
objectively reasonable basis to believe its removal on July 18, 2016 was timely. Therefore, the
Court will deny ASIC’s Motion for Reconsideration.
IT IS THEREFORE ORDERED that:
(1) DEFENDANT CONTINENTAL CASUALTY COMPANY’S MOTION FOR
RECONSIDERATION OF FEE AWARD PURSUANT TO 28 U.S.C. §1447(C)
(Doc. No. 284) is DENIED;

13

(2) DEFENDANT ATLANTIC SPECIALTY INSURANCE COMPANY’S MOTION
FOR RECONSIDERATION OF FEE AWARD (Doc. No. 293) is DENIED.

__________________________________________
SENIOR UNITED STATES DISTRICT JUDGE

14